OECD steel meeting seeks global solution

Government officials from 30 countries and international organizations in charge of steel-related industrial and trade policies have met in Brussels, to address overcapacity facing the global steel industry.

An official with China’s Ministry of Commerce says the country has taken the most concrete actions in the world to tackle excess steel capacity.

The meeting was co-organized by the Organization for Economic Co-operation and Development (OECD) and Belgian authorities on Monday.

It aims to improve economic viability of the global steel industry and help reduce trade frictions among trade partners.

According to a position paper released by the Chinese delegation during the meeting, excess capacity facing the steel sector is a universal problem for all steel-producing countries in the world.

The Chinese delegation blames notable economic slowdown, sluggish recovery, and decline in infrastructure construction for excess capacity in steel and some other industries.

The paper says China champions free and open international trade for the steel industry. It is important for countries to avoid taking any trade restrictive measures.

After the meeting, Zhang Ji, China’s assistant minister at the Ministry of Commerce, said the country has taken the most concrete actions in the world to tackle excess steel capacity.

SOUNDBITE: ZHANG JI, Assistant minister, Ministry of Commerce
“We don’t avoid the challenge of steel overcapacity. On the contrary, the Chinese government is determined to tackle overcapacity and takes the lead in the world in issuing policies and achieving results.”

China has ceased to license steel projects and started to close outdated plants and eradicate “zombie” companies.

Zhang said early efforts have achieved remarkable results, noting that China cut over 90 million tons of obsolete capacity from 2011 to 2015.

The State Council, China’s cabinet, announced earlier this year that crude steel production capacity will be slashed by 100-150 million tons over the next five years. It is estimated that 500,000 laid-off workers will have to be resettled.

The Chinese government is also committed to expanding domestic demand for steel products, which has a lot of potential as the Chinese economy will maintain a medium-high growth.

SOUNDBITE: ZHANG JI, Assistant minister, Ministry of Commerce
“China doesn’t offer any incentives or subsidies for steel export; rather, it adopts measures to limit the export. This isn’t seen in any other countries. China is a responsible country. Its steel industry mainly serves domestic demand, instead of export. We need more competitive and value-added products for export.”

Currently, only 5.6 percent of Chinese buildings use steel structures. China plans to increase that proportion to over 20 percent, which will need an extra 20 million tons of steel products a year.

China used to be a net importer of steel before 2005 and is still the fifth-largest importer of steel in the world.

Moreover, rather than dumping steel in other countries, the Chinese government has in recent years implemented measures such as export tariffs on some steel products to reduce exports.

Zhang called on all steel-producing, -consuming and -trading economies to step up communication and policy coordination and tackle steel overcapacity.

SOUNDBITE: ZHANG JI, Assistant minister, Ministry of Commerce
“Steel overcapacity is a shared problem, challenge and responsibility in the world. It needs to be tackled gradually with shared efforts according to laws, to achieve win-win results.”

According to statistics from the World Steel Association, world output of crude steel in 2015 was 1.62 billion tons, and the average capacity utilization rate was 69.7 percent, 3.7 percentage points lower than the 73.4 percent in 2014. This shows global overcapacity is growing worse.